Good morning POLITICO Pro Morning Energy readers, and happy Friday! Now that Pope Francis has spoken we all feel a little bit more responsible for saving the planet… or do we? His intervention ahead of the COP21 summit this December has certainly got the global media buzzing and policy makers across the world taking a stance. But there’s still lots to do until negotiators can hammer out an agreement in Paris, Energy and Climate Commissioner Miguel Arias Cañete told us over lunch.

WHAT’S HAPPENING

ETS — THE BOARD SAYS YES: As the Commission is readying its proposals for the Emissions Trading Scheme reform, (still) expected on July 15, one important step in the process was achieved Wednesday. The impact assessment — a document that lays out the reasoning behind the Commission’s policy choices — passed the Impact Assessment Board, Arias Cañete told us. A previous version wasn’t successful because it didn’t explain the technicalities in a language “that is easy to understand,” we’re told.

— BELT TIGHTENING: That’s what energy intensive industries will have to do with fewer allowances overall. “We have to target much more and analyze … which sectors are really exposed to carbon leakage and are unable to transfer costs to consumers without losing market share,” the Commissioner said. “The difficulty is to apply benchmarks.” Industry, governments and other interested parties are already readying their troops to make the case why they are vulnerable to carbon leakage. “Everybody is already knocking on our door,” Arias Cañete said.

TOUGHER TARGETS: There will be new standards for cars and vans post-2020, Arias Cañete said in a speech yesterday, adding that efforts to decarbonize transport need to be kept up and that the bloc must go further on emission limit targets. But he was also keen not to ruffle feathers. “Let me reassure you: these targets will be ambitious but achievable,” he said. Still, he’s under no illusion that setting new standards will be easy. “It will be heated,” he told us. Maroš Šefčovič, the vice president for the energy union, also had something to say, reminding the audience via video message, “our transport sector currently relies almost exclusively on imported oils, accounting for one quarter of our greenhouse gas emissions. This means that road transport must be part of the answer.” Catch the video here: http://bit.ly/1d55wM5 and Arias Cañete’s speech: http://bit.ly/1fiOxaF.

LONG-HAUL EMISSIONS TRADING: The airline industry would prefer to see a global ETS, having shifted its position after a backlash at the European trading system three years ago, the head of the International Airlines Group has told Reuters earlier this week. The outcry forced the EU to extend a law that would have forced European flights to comply with the ETS from 2012. Here’s more: http://reut.rs/1L1WugB.

**A message from FuelsEurope: The EU refining industry provides everyday fuels reliably to the 230 million cars and 34 million trucks moving citizens and goods in Europe. Oil refined fuels for transport represent today 90% of the energy used in transport and could still represent about 77% by 2040 according to the International Energy Agency (IEA) in the 2014 Energy Outlook.**

DO MORE, DO BETTER: Protecting the environment is a moral duty, said Pope Francis in his much awaited encyclical Thursday. Arias Cañete agrees, tweeting soon after the encyclical was officially published “we need global unity on climate change ahead of COP21.” Gianni Pittella, chair of the European Parliament’s S&D Group, joined the chorus, reminding that human dignity, freedom, equality and solidarity — at threat from climate change and human neglect of the environment — are core EU values. The climate message, however, didn’t go down well with conservative U.S. politicians — our D.C. colleagues have more: http://politi.co/1BqvB3z.

— BUT DON’T USE CARBON MARKETS: While it was difficult to find fault with the Pope’s call to protect the environment, his strong words on carbon markets didn’t thrill the International Emissions Trading Association (IETA). “Carbon markets are typically quite competitive, and they contain safeguards against the excessive speculation warned about in the encyclical … market mechanisms can help keep the costs down for producers and consumers alike” and so, they “can benefit climate action and enable businesses to do well by doing good.”

FINANCING EFFICIENCY: Energy efficiency has been all the rage at the EU’s Sustainable Energy Week, which came to a close yesterday. ForŠefčovič, to achieve the 2020 and 2030 targets you need to come up with the right financing framework. According to estimates, around €100 billion per year is needed to achieve the 2020 energy efficiency target. Current investments, however, amount to less than half of that and are five times less than what is needed to deliver the decarbonization targets. Here’s Šefčovič’s speech: http://bit.ly/1Bqj8gp.

A RENEWABLE FUTURE: Renewables had an outstanding year, according to a global status report by REN21, a policy outfit. In fact, renewable energy’s unprecedented growth of 135 gigawatts made up over 60 percent of the net additions to the world’s power capacity. And the good news for the planet is that because of the rapid growth of renewable power and better energy efficiency in several large countries, the world’s economy grew without a parallel rise in CO2 emissions. Read the report here: http://bit.ly/1efO215.

BUT FORGET SUBSIDIES: For onshore wind projects, in the UK. Whitehall delivered a blow to the industry Thursday morning by announcing it would end the Renewable Obligation subsidy scheme for onshore wind farms on April 1 2016, a year early. It says onshore wind, which generates 5 percent of the country’s electricity, has grown fast enough that it can stand on its own without public support, which amounted to £800 million in 2014. The industry, however, believes it will lead to higher fuel bills. Here’s more from Sara: http://politi.co/1d3W5MW and a look at how the Scottish National Party is backing renewables, from Jules Johnston: http://politi.co/1HWi2dL

UKRAINIAN COUNTDOWN: Russia got the clock ticking in December, announcing that it would cut the country off as a transit route from 2019 when the current contract expires. Since then it’s been working and communicating hard to make that a reality, pushing its Turkish Stream pipeline project with the Turkish side and meeting regularly with partners in Southeast Europe. Brussels has been skeptical of the project for months, questioning the economic feasibility of unilaterally shifting delivery points. But the Commission is increasingly concerned about the Russian plans. “We have a major problem with the decision of the Russians to stop gas flows through Ukraine,” Arias Cañete told us. Greece, however, is reportedly due to sign a preliminary agreement to participate in a planned extension through Greece when the country’s PM Alexis Tsipras makes a pit stop in St. Petersburg today, a Greek energy ministry official is reported as saying. The WSJ has the story: http://on.wsj.com/1N631pF.

— WE MEAN IT: Gazprom also announced yesterday that it had agreed with OMV, E.ON and Shell to add two legs to Nord Stream, which ships Russian gas to Germany via the Baltic Sea. Gazprom would own 51 percent, with capacity of 55 billion cubic metres per year, said spokesman Sergei Kupriyanov, according to Reuters. Driving the deal: the prospect that Europe will import more gas. “New projects are important for satisfying energy demand, particularly as Europe’s domestic production of natural gas declines,” Shell CEO Ben van Beurden said in a Gazprom statement. E.ON’s Klaus Schäfer added, “with this project we plan to continue and expand our successful partnership with Gazprom.” Reuters reports from St. Petersburg: http://bit.ly/1GuxZW5.

YUKOS SHAREHOLDERS DECLARE WAR: Belgian and French authorities have moved to seize Russian assets in connection with a lawsuit brought by the former majority owner of Yukos Oil Company, which won a $50 billion claim against the Russian Federation last year. The assets are the first to be publicly identified in the suit, which could eventually ensnare properties belonging to Russian state-owned companies like Gazprom, Rosneft, and RT. Linda Kinstler has more: http://politi.co/1ImMJEK.

AN UNCONVENTIONAL GAS BOOM WHERE?: In Russia! Yes, the country has an estimated 665-680 trillion cubic meters of untouched shale and tight gas, gas hydrates and coalbed methane, according to the Polish Institute of International Affairs (PISM). That’s pretty big, although it’s still a rough estimate and it mostly lies in remote areas of Siberia, the Ural Mountains and the Arctic. Moscow is keen to develop this and maintain its status as a top gas producer worldwide, particularly as it predicts its conventional gas output will decline by 75 percent by 2030. But it’s hard to make an economic case for developing these resources, PISM says. The country’s domestic demand has slowed with the financial crisis, improved efficiency and sanctions. It will also need to form partnerships with foreign companies that have the technology and expertise to do this work. Here’s the report: http://bit.ly/1JZNkAm.

PILING UP — JAPAN’S PLUTONIUM: In France, since Japan switched off its last nuclear reactor in September 2013. The question of what to do with 16 tons of plutonium waiting in France was being discussed yesterday and today in meetings between nuclear proliferation experts and Japanese government officials and policymakers. Tokyo was hoping to begin phasing nuclear power back in early this year, with four reactors approved for re-start, but the process has been continually delayed amid strong public opposition. Meanwhile, French nuclear group Areva faces billions of dollars of losses while it waits to sell the plutonium. Reuters reports from Tokyo: http://reut.rs/1GRtvui.

WHAT’S COMING

MANAGEABLE TEXTS FOR COP21: The disappointment with negotiations in Bonn still lingers. From a document that was 89 pages long, “We finished with 80,” Arias Cañete told us. But there is hope that a shorter working document that “clearly identifies options for negotiators” will be published on July 24. And if that’s delivered, “We’ll have a text that will be more manageable,” he said.

HOME, SWEET HOME: The bloc’s energy chiefs continue their tour of Europe, but this time it takes them home. Arias Cañete will be in Madrid Monday, then Rome Tuesday, while Šefčovič will spend the weekend in Bratislava.

THANKS to Helena O’Rourke-Potocki

**A message from FuelsEurope: Carbon price transparency supports better policies for transport decarbonisation: Many studies, from the Commission, IEA and respected academics have shown that ambitious approaches for transport decarbonisation, beyond efficiency improvements, can require effective (but usually hidden) carbon prices of up to 100 times that of the current ETS price. Ambitious goals targeting these approaches, especially for fuels and vehicles, are now being openly discussed in Europe for post-2020. This risks making transport unnecessarily expensive for all businesses and citizens, whilst giving very poor value in terms of climate benefit for the money spent. In the name of European jobs, growth and competitiveness, we must avoid a unilateral “twin-track” carbon cost approach, and consider instead how transport can support societal decarbonisation in other ways, whilst still developing important transport technologies for the longer term. We call on the commission to fully incorporate carbon price transparency into its evaluation of the way forward.**